In Jim Cook's Archive


When I started selling gold and silver in 1972, I was heavily influenced by the writing of the economist Ludwig von Mises. He had written a number of books advocating the market economy, limited government, sound money and low taxes. Mises was a ranking member of what was known as the Austrian School of economics. He had experienced the great Weimer inflation in Germany, and he was death on easy money and currency debasement. He recommended the gold standard.

His writing stressed the idea that aggressive monetary and credit expansion would cause inflation. However, when the monetary authorities reduced interest rates, and slowed down money and credit growth, a recession or depression would inevitably unfold. Our Federal Reserve has stymied money and credit expansion and inflation has subsided, contrary to what Austrian School economists argued would happen.  The central theme of Mises and his followers seems to be invalidated. If that holds, it would be a crushing setback for the Austrian School.

Frankly, I believe Mises was too smart to be wrong. Therefore, don’t be surprised to see inflation cropping up again. Also, don’t be surprised by a bad recession with shocking business failures that ravage markets. Mises would say that the debacle hasn’t even got started yet. He would tell us the coming year will be grim, and that an economic crisis is inevitable.

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